Amanda Levin provided original research for this blog post.

If you think you or your organization is going to be involved in a legal matter, you are legally bound to preserve communications or information that might be considered evidence. Several recent events in Colorado, including items at school districts as well as a recent controversy at the University of Colorado, illustrate the importance of taking action appropriately.

Also termed a “legal hold,” a litigation hold concerns a party’s obligation to preserve potentially relevant evidence. Usually triggered by the filing of a lawsuit, the leading Colorado case regarding litigation holds and spoliation of evidence found that “the obligation to preserve evidence may arise even earlier if one party indicates that future litigation is likely,” from Cache La Poudre Feeds, LLC v. Land O’Lakes Inc. 244 F.R.D. 614 (D. Colo. Mar. 2, 2007). Potential evidence includes emails, notes or physical parts. Parties can face sanctions for spoliation of evidence if they are found not to have placed holds on information the court deems as passing the “relevant to an issue at trial” test established in Equal Employment Opportunity Commission  v. Dillon Companies, Inc., 839 F.Supp.2d 1141, 1144 (D. Colo. 2011).

Attorneys have a duty to advise their clients on the legal requirements of a litigation hold and also ensure the hold is properly enacted, as sanctions can occur if data is lost due to a “sloppy” litigation hold.  Day v. LSI Corp., No. CIV-11-186-TUC-CKJ, 2012 U.S. Dist. LEXIS 180319 (D. Ariz. Dec. 19, 2012). Attorneys must oversee the entire discovery process and search out where evidence may be stored so that all eventualities can be covered in the legal hold.

For instance, the case of Metropolitan Opera Ass’n, Inc. v. Local 100 Hotel Employees and Restaurant Employees International Union, 212 F.R.D. 178, 221-24 (S.D.N.Y. 2003) held that the defense counsel should have better instructed the defendant regarding discovery obligations, inquired about the client’s document storage capabilities, implemented a system to retain documents and asked important witnesses for documents as well. In the University of Colorado matter, the legal department sent a “legal hold data survey” to employees asking recipients to identify where relevant data could be stored.  This procedure was in keeping with the University’s legal obligations to preserve evidence to protect the University’s interests in the event of litigation.

The legal duties of a litigation hold can be extensive. Courts have held that monetary sanctions may be granted for a multitude of evidence issues, including organizations failing to turn off automatic email deletion programs or preserve backup tapes normally scheduled for recycling or destruction.  See State National Insurance Co. v. County of Camden, 08-5128 (NHL) (AMD), 2012 U.S. Dist. LEXIS 38504 (D.N.J. Mar. 21, 2012). As an additional sanction, plaintiffs may be permitted to tell the jury during proceedings if the defense has lost a key piece of evidence due to a sloppy hold, and jurors will be permitted to assume that the lost piece of evidence would have helped prove the plaintiff’s case, which can compromise a defense.

Bottom line: We suggest organizations or parties who believe they may be facing potential litigation should always contact an attorney to review their legal obligations and properly enact any legal holds that may be necessary.

For more information regarding litigation holds, spoliation of evidence and legal obligations of involved parties, please contact Gwyneth Whalen, litigation section head, at 303-443-8010 or [email protected].